Of course it's ok to ask...that doesn't obligate you to answer yes. Be grateful the parent asked and didn't just show up with sibling in tow! Now that's rude! I don't think it's rude to ask them to pay for the sibling to attend. Since you're okay with the sibling coming, simply say "I don't mind sibling coming, but it is $X per child, and unfortunately we can't cover the cost for siblings." (They may be expecting this anyway)
I've had to bring my other kids along to bday parties at locations where the cost was per child. I called to give the host parent a heads up that my other kids are coming, but that I didn't expect them to be included in the party and I would pay their costs. Both times they had other invited children who didn't show, so my kiddo got their spot (since they had to pay anyway).
To help you understand why parents ask for siblings to attend, here's my situation: My husband does not have traditional work hours, and had to work on the Saturdays of those bday parties. My 2 older boys are not old enough for me to drop them off at a location party (like mini golf, laser tag, or whatever) and parents are expected to stay. We live 30 minutes away from all potential party locations, so driving back and forth isn't an option anyway. I don't know any of the other parents going well enough to ask them to take my kid. I am not going to pay a babysitter so my child can go to a bday party. I am not going to use a valuable babysitting-swap with a friend so my child can go to a bday party. So, if it's important for the birthday kid for my child to attend, then I figure the parent will be willing to work with me. If not, then they'll say no and I'll RSVP no. On the flip side, if it was my party and my son's friend wasn't able to attend because of lack of childcare for siblings, I'd want to know so I could work something out with the parent.